At Debt Support Trust we are often asked who is affected by debt, although this question may be asked in a variety of ways.
Sometimes people are worried whether an ex partner’s debt will affect them, others are concerned their own debt might be harming other people.
There are two ways someone may be affected by another person’s debt, both directly and indirectly, and it’s important to understand the difference.
Directly Affected by Debt
The only people who will be directly affected by debt are those who are named on a credit agreement, for example people with a joint loan or credit card.
This will mean both parties will be liable to repay the debt and both their credit ratings could be impacted. Some people have been led to believe if they didn’t use the credit facility they may not be liable, however if they are named on the agreement they will still be responsible to repay it .
Indirectly Affected By Debt
Just because someone isn’t name on a credit agreement and isn’t liable for the debt, doesn’t mean they won’t still be affected by the outstanding credit.
Commonly this happens when a spouse has a debt in their own name and their partner may require financial help from them. They may need to increase their share towards the household expenditure to compensate for additional money being paid to debts.
Joint assets may also mean someone is affected by debt even though they may not be named on a credit agreement. Equity from assets may have to be released for the benefit of creditors, and while a partner may not have debt, they could be affected by the outstanding credit their spouse or partner has accrued. The most common example is equity in property where two people are named on a mortgage. If a partner enters a debt solution it may be necessary to realise assets, which could force the partner without the debt to raise funds or sell the asset.
Discuss Debt With Partner
New figures from the Debt Advisory Centre has found 1 in 5 people don’t tell their partner about their debt. This is despite two thirds of those in a relationship having an average debt of £3,400.
Speaking to a partner can help find a solution and the earlier they are made aware of it, the quicker it can be dealt with.
If you are worried about speaking to your partner about a debt problem, call Debt Support Trust on 0800 085 0226 and we can help.